The Obama administration announced last Wednesday that it had finalized its plan to loosen the credit requirements needed to obtain federal PLUS loans.
Under the new regulations, which will take effect next year, it will be easier for students and parents with damaged credit histories to take out PLUS loans.The rule reduces from five years to two the period of time that the Education Department reviews when evaluating a prospective borrower’s history for adverse credit events. It will also exempt up to $2,085 in delinquent debt from counting against an applicant; that threshold will be adjusted for inflation.
But the final regulations also come after several years of intense lobbying from the leaders of historically black colleges, whose students often rely heavily on Parent PLUS loans to finance their tuition. The Education Department angered many colleges and families after it tightened standards for the PLUS loan program in 2011, resulting in tens of thousands of sudden loan denials.
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